The 21st century is only 20% complete and we’ve already seen multiple unprecedented events — 9/11, the global financial crisis of 2008 and now COVID-19. While history never repeats itself, it often rhymes. So, what — if anything — can the previous crises tell us about what the real estate market in New York City has ahead? 

Newmark Knight Frank’s recent report sheds some light on what we might expect in the upcoming weeks, months and years by looking at what has happened in the past, as well as what preceded it. Check out a summary below: 

9/11: Manhattan & the Financial District 

Recessionary signals had already been starting to appear in the market before 9/11. For instance, office availability in Manhattan prior to the terrorist attacks rose from 7.5% in Q2 2000 to 10.1% a year later. Then, following the attack, the availability of offices in the Financial District increased for four consecutive quarters, while average asking rates fell for three straight years. These metrics didn’t return to pre-9/11 levels until Q1 2007. Leasing velocity also fell, averaging 3.5 million square feet until 2005. 

The borough overall recovered faster than the Financial District. The former took about three years for availability levels to bounce back, and lease rates took five years. However, after topping out at more than 21%, the Financial District’s availability didn’t fall below 16% until 2006. The same year, average leasing volume returned to 5 million square feet. 

Global Financial Crisis 

Right after things were returning to pre-9/11 levels, the global financial crisis hit in Q4 of 2008. The market had peaked in that year, but by Q3 of the following year, rents had plummeted more than 31% — and took more than seven years to recover. 

Availability in Manhattan jumped almost 49% in one year, and still hasn’t fallen back to pre-crisis levels of 9.6%. Meanwhile, renewals helped support the market in the following years as landlords looked to keep tenants. Likewise, companies — looking for some stability — renewed leases at lower rates. Rents fell to around $50 per square foot but had recovered to pre-crisis levels by Q4 2013 and have continued to increase since then. 


Prior to 2008, the real estate market was arguably overheated. In the same way, prior to this pandemic, the market was in a similar place, coming off consecutive years of record leasing activity that saw 50 million square feet of velocity in 2019 alone. Availability had been around 12% since 2016, and lease rates were reaching cyclical highs of around $80. Now, both are expected to have inversions as availability increases and lease rates decline. 

In the months leading up to the pandemic, a correction was a popular topic among market professionals. But the pandemic has accelerated the pullback that most were expecting — and more than likely worsened it. Lease rates are expected to fall as landlords work to secure tenants in any anticipated available space. Moreover, “shelter-in-place” orders have halted non-essential construction work, leaving 16.2 million square feet of office space delayed for months, if not longer. 

It may be too soon to know exactly how COVID-19 will affect the market, but it’s clearly another inflection point. And, while the circumstances leading up to and immediately after both 9/11 and the global financial crisis were quite similar to the circumstances before the pandemic, both recoveries were unique — just as the recovery from this pandemic is likely to be. 

Patrick McGregor

Patrick McGregor

Patrick McGregor is a senior writer covering the real estate industry and overall economic trends in the United States for several Yardi product publications. He also holds an MBA from Thunderbird School of Global Management. Patrick was previously a commercial real estate analyst at Yardi Matrix for five years. His work has appeared in the New York Times, Bisnow, GlobeSt, The Real Deal, Business Insider, The Denver Post, The Motley Fool, and more.